Cadastral valuation of lands dedicated to perennial plantings: features and practice
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E3S Web of Conferences 177, 04002 (2020) https://doi.org/10.1051/e3sconf/202017704002
Ural Mining Decade 2020
Cadastral valuation of lands dedicated to perennial
plantings: features and practice
Kirill Zhichkin1, Vladimir Nosov2,*, Aleksandra Lakomiak3, and Lyudmila Zhichkina4
1Samara State Agrarian University, Department of Economic Theory and Economics of AIC, 446442,
Kinel, Russian Federation
2K.G. Razumovsky Moscow State University of Technologies and Management, Department of
Economics and Management, 109004, Moscow, Russian Federation
3Wroclaw University of Economics, Department of Financial Accounting and Control, 53-345,
Wroclaw, Poland
4Samara State Agrarian University, Department of Land Management, Soil Science and Agrochemistry,
446442, Kinel, Russian Federation
Abstract. The article considers the issue of cadastral valuation of
agricultural lands used for perennial plantations (orchards). Unlike other
agricultural crops, orchard crops occupy the land for a long period of time,
therefore, the planting expenditures are capital. The purpose of the study is
to define the features and adapt the existing methodology for cadastral
valuation of lands occupied by orchards considering the actual return on the
evaluated land plot and the distance factor that affects the increase in cost
and decline in return depending on the location of the plot in relation to the
main markets. The example (plots are located in the Bezenchugsky district
of the Samara region) shows that the costs of orchard plots are 2.73 and 2.93
rubles per square meter, respectively. Quality characteristics of the first plot
are better, but it is located further from the centre of the region.
1 Introduction
Land plots of conditionally permitted use are agricultural lands unfit for tillage but used for
cultivation of technical crops, perennials, berries, tea, grape and rice [1-3].
Perennials of the Samara region are represented by relatively small industrial orchards
and berry-fields (except for the horticultural societies that are not considered in this paper).
The real estate market lacks of such objects, so it is not possible to estimate the market value
using the comparison approach [4, 5].
2 Methods and Materials
In this case, we can consider the formation of the market value of lands from two angles:
*
Corresponding author: novla@list.ru
© The Authors, published by EDP Sciences. This is an open access article distributed under the terms of the Creative Commons
Attribution License 4.0 (http://creativecommons.org/licenses/by/4.0/).E3S Web of Conferences 177, 04002 (2020) https://doi.org/10.1051/e3sconf/202017704002
Ural Mining Decade 2020
- using the cost approach, similar to the principle of estimation of lands of the third and
fourth types of permitted use;
- using the income approach [6-8].
We can evaluate land plot occupied by orchards using the same algorithm as in the
evaluation of agricultural lands, where there is a need to determine:
- using the cost approach, similar to the principle of estimation of lands of the third and
fourth types of permitted use;
- using the income approach [6-8].
We can evaluate land plot occupied by orchards using the same algorithm as in the
evaluation of agricultural lands, where there is a need to determine:
- the yield per unit;
- the product value;
- the costs per unit of cultivation and maintenance of soil fertility;
- the unit revenue;
- the unit rent (entrepreneur's expenditures and profit excluded)
- the unit cadastral value of lands occupied by perennials;
- the cadastral value of land plots [9-12].
The general formula for calculation of the value of the land occupied by the orchard is:
UCV = Income/Ко (1)
where Ко is the capitalization ratio.
Income = Y•Pr-Cost-EP (2)
where Income is the net income for the crop, rubles;
Y – yield during the heavy bearing season, rubles/ha;
Pr is the sale price, rubles/kg;
Cost – costs of cultivation and harvesting during the economic life period, rubles/ha;
EP – entrepreneur's average profit in agriculture, rubles/ha [13-18].
3 Results and Discussion
Evaluating lands dedicated to perennial plantings, we need to consider the time factor that
reflects the period of expenditures uncovered by production. For example, modern apple
orchards have a 15-18 years economic life period, and it takes trees 4-6 of those years to fruit.
The last years of this period are characterized by a decrease in yields. At the end of the
economic cycle of the orchard, there is a need to remake it or to eliminate it in order to vacate
the land. This approach considers the income generated by the soil fertility and fixed assets,
which include fruit trees, and results in an overvaluation of land [19-22].
Table 1. Costs and revenues from raspberry cultivation in the Samara region, rubles.
Costs
Article
per 1.4 ha per 1 ha
Electricity 18 750.00 13 392.86
Fertilizers 2 352.00 1 680.00
Plant protection agents 9 240.00 6 600.00
Combustibles and lubricants 41 931.00 29 950.71
Salary 178 901.00 127 786.43
Allowance 62 615.35 44 725.25
Other 36 000.00 25 714.29
TOTAL 349 789.35 249 849.54
2011 gross yield 64.00 Cwt
2E3S Web of Conferences 177, 04002 (2020) https://doi.org/10.1051/e3sconf/202017704002
Ural Mining Decade 2020
Price 75.00 Rubles/kg
Revenue 480.00 Thousand rubles
Revenue per 1 ha 342.86 Thousand rubles
Tables 1 and 2 show the generalized economic calculation of a 1.4 ha raspberry field set
out on chernozem soil (based on data for farms using the modern Polish technology for
growing raspberry and strawberry). The data is at 2011, however, considering the fact that
the plantings were watered, we can assume that yield was the same in the dry 2010 year.
Table 2. Calculation of the value of land occupied by perennials (raspberry field).
Indicator Value
Net income, sprinkler system depreciation included, rubles 93 007.61
Annual depreciation, rubles 12 500.00
Net income before depreciation 80 507.61
Net income 7 years, rubles/ha 563 553.25
Annual revenue to the eight-year cycle, rubles/ha 70 444.16
Capitalization ratio 0.10
Land value, rubles/ha 704 441.56
Land value, rubles/square meter 70.44
Raspberry bears fruit in the second year after planting. Plantation works for 8 years.
Irrigation is required.
When the 5-6-years production cycle is ended, the arable land is sowed with other field
crops.
It is better if the preceding crop is spring cereal or if the land was left fallow.
Table 3 presents the calculation of the irrigation system depreciation. The calculation is
similar to the one done when creating an irrigation system for an orchard [23-25].
Table 3. Calculation of the depreciation allowance.
Indicator Value
Orchard area, square meters 2 000 000
Expenditures for hydraulic structures, rubles. 20 000 000
Unit costs, rubles/ square meter 10
The berry field area, square meters 10 000
Sprinkler system value, rubles 100 000.00
Depreciation period, years 8
Annual depreciation flow, rubles 12 500.00
The obtained result (70.44 rubles/square meter) exceeds the base land cost (before making
a raspberry field) by several times, which confirms that the impact of fixed assets on the value
of occupied land is significant.
We also offer to consider a similar example of calculation for an apple orchard (an
intensive technology for dwarf rootstocks).
It bears fruit in the fourth year after planting. The orchard works for 15 years (since
planting). Irrigation is required.
When the 5-6-years production cycle is ended, the arable land is sowed with other field
crops. According to Table 4, it is better if the land is left fallow for a period of time.
Table 4. Costs and revenues from cultivation of an apple orchard in the Samara region, rubles.
Costs
Atricle
138 ha land plot Per 1 ha
Electicity 86 810 629
Fertilizers 200 000 1 449
3E3S Web of Conferences 177, 04002 (2020) https://doi.org/10.1051/e3sconf/202017704002
Ural Mining Decade 2020
Plant protection agents 2 111 896 15 304
Combustibles and lubricants 857 808 6 216
Salary 2 485 205 18 009
Allowance 869 822 6 303
Other 1 566 000 11 348
TOTAL 8 177 540 59 258
2011 gross yield 15 870 Cwt
Price 20 Rubles/kg
Revenue 31 740 Thousand rubles
Revenue per 1 ha 230 Thousand rubles
The result presented in Table 5 is significantly higher than the cost of land occupied by
an orchard. It should also be taken into account that garden trees are classified as fixed assets,
and their value is partially transferred to the land value.
Table 5. Calculation of the value of land occupied by perennials (apple orchard).
Indicator Value
Net income, sprinkler system depreciation included, rubles 170 742.46
Annual depreciation, rubles 12 500.00
Net income before depreciation 158 242.46
Capitalization ratio 0.10
Land value 1 582 424.61
Land value 158.24
Net income 11 years, rubles/ha 1 740 667.07
Annual revenue to the fifteen-year cycle, rubles/ha 116 044.47
Capitalization ratio 0.10
Land value, rubles/ha 1 160 444.72
Land value, rubles/square meter 116.04
As mentioned above (when calculating the value of lands of the third and fourth types of
permitted use), the business value cannot be transferred to the value of land entirely.
Therefore, when calculating the value of lands of the second type of permitted use, we
can use the approach similar to the one used when calculating the value of lands occupied by
buildings and facilities.
Table 6. Calculation of the cadastral value of the land plot occupied by perennials in the
Bezenchugsky district.
Distance to the
The
Plot number Plot location Permitted use Area, m2 regional centre,
code
km
The Samara Region.,
63:12:0301002:1 For orchard 87700 2 30
Bezenchugsky district
The Samara Region.,
63:12:0403004:1 Under orchard 3779666 2 16
Bezenchugsky district
In addition to the synergistic effect of the land value, there is also a need to consider the
factor of distance of the land plot to the regional centre.
Hence, the total market value of a land plot of the second type of use can be calculated
using the following formula:
Сi = 1,2628·Сn·(1+Li) (3)
where Сn is the market (cadastral) value of surrounding lands;
1,2628 is the synergistic effect ratio equal to the entrepreneur's profit margin;
4E3S Web of Conferences 177, 04002 (2020) https://doi.org/10.1051/e3sconf/202017704002
Ural Mining Decade 2020
Li is the distance factor of the evaluated land plot to the regional centre.
Table 7. Calculation of the cadastral value of the land plot occupied by perennials in the
Bezenchugsky district.
Unit cadastral Unit cadastral
value of a value of a land
Entrepreneur's Cadastral value of
vacant land Distance plot occupied by
Plot number profit margin, the land plot under
plot, factor, % an prchard,
% evaluation, rubles
rubles/square rubles/square
meters meters
63:12:0301002:1 1.70 26.28 0.2734 2.73 239 751.16
63:12:0403004:1 1.68 26.28 0.3828 2.93 11 088 187.87
Tables 6 and 7 present the calculation of value of land plots of the second type of
permitted use in the Bezenchugsky district.
4 Conclusion
The proposed methodology for cadastral valuation of agricultural lands dedicated to
perennial plantings is based on the described approach. Moreover, there is a need to take
account of the actual return of the land plot and the distance factor that affects the increase
in cost and decline in return depending on the location of the plot in relation to the main
markets. The example (plots are located in the Bezenchugsky district of the Samara region)
shows that the costs of orchard plots are 2.73 and 2.93 rubles per square meter, respectively.
Quality characteristics of the first plot are better, however, it is located further from the centre
of the region.
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